Thanks for prodding me again & again to look at Kaveri:)
Here’s some quick questions, that come to mind. Tomorrow I will do some reading up/research of my own. As I am a late entrant into the discussion, I want to first concentrate on the risks, and then the positives - mostly posed as top-of mind queries. Appreciate if you can bring me upto speed fast:)
1). Over 50% of revenues come from BT cotton. I read this is licensed from Monsanto. How does the licensing relationship work. What prevents Monsanto from licensing Bt cotton - decide to go it alone in the Indian market (since the BT cotton growth is huge, I read)? How big a risk is this?
2). Royalty - how is it calculated? Can Monsanto raise it arbritarily?
3). What % of Sales is from licensed products, and in-house
4). How are the regulations in the seed sector? There might be price-capping? Is this statewise & arbitrary
5). How do we know for sure 2012 June Qr is not a one-off performance? What are the sources of this huge growth? Do we understand this properly?
6). Why will MNC players not kill a Kaveri Seed if it grows too fast? What kind of competitive pressures apply in this market
7). What is a good diversified seed product basket in India? How does Kaveri compare on that front?
8). if we look form 2007, there seems to be gradual operating margin erosions - from 28% in FY07 to 24% in FY11 - what are the reasons?
1). Seed business may be a huge given the food situation globally and in INdia. Whats the total Indian market size? growing at what rate?
2). Valuation-wise -historically cheap at 10x, and potential for big re-rating if compared to Peers like Advanta, Monsanto. How’s the valuation compared to Indian seed companies
3). Is Kaveri the biggestIndianseed company. if not who’s the biggest and why?